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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Es = (%dQs) / (%dPrice)






2. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






3. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






4. Ed < 1






5. Exists if a producer can produce a good at lower opportunity cost than all other producers






6. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






7. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






8. AVC = TVC/Q






9. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






10. The difference between total revenue and total explicit costs






11. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






12. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






13. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK






14. Ed = 0 - no response to price change






15. Entry of new firms shifts the cost curves for all firms upward






16. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






17. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary






18. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






19. Costs that change with the level of output. If output is zero - so are TVCs.






20. A good for which higher income decreases demand






21. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






22. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit






23. The total quantity - or total output of a good produced at each quantity of labor employed






24. The output where ATC is minimized and economic profit is zero






25. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






26. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






27. The mechanism for combining production resources - with existing technology - into finished goods and services






28. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






29. A firm that has market power in the factor market (a wage-setter)






30. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






31. TR = P * Qd






32. Ed = 1






33. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






34. Exists if a producer can produce more of a good than all other producers






35. The rational decision maker chooses an action if MB = MC






36. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






37. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






38. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






39. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.






40. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






41. Ed > 1 - meaning consumers are price sensitive






42. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






43. AFC = TFC/Q






44. The change in quantity demanded resulting from a change in the price of one good relative to other goods






45. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






46. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






47. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.






48. Models where firms are competitive rivals seeking to gain at the expense of their rivals






49. The marginal utility from consumption of more and more of that item falls over time






50. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.